11 ways to save after retirement
Rent before you buy. Looking to try out a new lifestyle, such as living
out of an RV or moving to a fishing cabin in the north woods? Try it before you
"Sure you enjoyed your vacation in the RV, but
do you really want to live in it?" says Farrell.
negotiate to try it out for six months, and see how it wears on you. "You're
not sinking your hard-earned savings into a new lifestyle," says Farrell.
"You're leaving your options open."
Eliminate extra fees and charges. This is a good time to slowly look over
the fine print on your finances. Is your bank charging outrageous service fees?
Shop other banks or credit unions that are willing to offer you the same options
part time. If you enjoy your job, or the job you're considering, this is
a great move. Any money you're earning isn't coming out of your 401(k), which
means you're actually saving cash for later. But run the numbers before you go
back to work. And if you don't do your own taxes every year -- this might be a
good time to hire a pro to tally it up for you, according to Farrell.
you start collecting Social Security between 62 and your "year of normal
retirement" -- a benchmark set by the Social Security Administration that
varies with your birth year -- watch your income. If your job paid you more than
$12,480 in 2006, you could lose a sizable chunk of your Social Security benefits.
(One dollar for every $2 you bring in over $12,480). For 2007, the amount increases
to $12,960. Either keep your earnings below that threshold or defer Social Security
until later in retirement, when you cut back on your earned income.
don't forget to weigh the intangibles. If work is drudgery, that's one thing,
but if you crave interaction with other people and want to keep your professional
skills sharp, it may be worth a little extra in taxes.
Claim that senior discount. "Use every discount you can, including
that AARP membership," Farrell says.
He has one family
friend who took this technique a step further -- much to his financial benefit.
Newly retired, the man went to the independent businesses he'd patronized for
decades, announced he was now retired and asked the owners what kind of a discount
deal they could offer.
"It's no different than the deals
he [negotiated] for years in his working life," Farrell says.
often, he adds, retirees don't look at it that way. They need to realize that
they are a very valuable commodity, especially for independent businesses. They
tend to be extremely loyal, have disposable income and visit frequently. In return
for regular patronage, some gas stations, diners, dry cleaners and the like are
willing to offer them perks to keep their business, according to Farrell.